Old Technology

But sensors aren't new, and neither is RFID. General Electric Co. has been using them for years to help its engine customers detect problems before they cause hazards to users. But thanks to new manufacturing processes, recent wireless technology and smarter software, the tiny devices are now at the forefront of an important new trend throughout the manufacturing and consumer goods industries that is already beginning to accelerate the speed at which companies can respond to the marketplace. As with microprocessors and lasers in earlier decades, the novelty is not that these sensors exist at all, but that they have suddenly become cheap enough to be used in ordinary, everyday productsand are already starting to save companies a bundle (see "Making Waves" sidebar). Whether tiny thermometers, mini-microphones, electronic noses, location detectors, motion sensors or RFID tags, all of them can provide information about the physical world and represent a whole new level of automation that experts predict will accelerate the pace of corporate activity, if not change the face of the economy itself.

Before RFID tags, for example, Associated Food Stores Inc. used to have 127 people spend at least part of their day typing information about truck locations into a yard management system. That was not only inefficent; it was inaccurate. The information in the database was wrong 40 percent to 70 percent of the time. Now each truck contains an RFID sensor that automatically signals its location in the yard in real-time for a savings to the company of more than $1 million. The tags made it possible for AFS to get smarter about tracking, and cut 53 trucks and some drivers from the fleet roster. The tags also helped to reduce food spoilage caused by goods sitting in trucks that couldn't be found right away, for additional savings.

Multiply these speed and efficiency bursts by thousands of potential applicationsand new ones, such as the ability of, say, an RFID sensor to track a box of Cheerios from factory to kitchen shelfand you're opening up whole new possibilities for everything from inventory control to customer service to customized product delivery.

Days to Hours

Think of it this way: The development of RFID tags is, in some ways, an extension of the decades-old "just-in-time" inventory drive by firms to shrink multibillion-dollar stockpiles into smaller, cheaper ones. In the 1970s, the Japanese undercut U.S. car manufacturing's production costs by hundreds of dollars per vehicle, just by replacing parts' storehouses with systems aimed at delivering parts to assembly lines as they were needed. With just-in-time manufacturing, companies cut inventories of parts from weeks to days. Sensors, backers say, will represent a move from days to hours. "Once all of these machines start talking to one another, they're going to make commerceand the worldmove much faster, more efficiently and at speeds that humans alone couldn't match," says Paul Saffo, director of the Institute for the Future, a West Coast think tank.

Sound too good to be true? Think again. Ashton and his researchers have gotten this new "sensor-chain" to work, for the most part, in recent tests. In October, they wired a P&G factory in Cape Girardeau, Mo., with readers and slapped RF tags on pallets of Bounty paper towels. They also wired forklifts at one of Wal-Mart's Sam's Club stores in Tulsa, Okla. The goal was to prove that the Internet-like RFID infrastructure designed by the Auto-ID Center could, in the real world, record the movement of goods from the factory to the store with no human intervention. Consider it a test of the first phase of the Internetbut instead of proving an e-mail could be sent over vast distances, Ashton and his team wanted to show that a pallet of paper towels could communicate its movement directly to computers.

As the paper towels left the factory, readers stuck on bay doors with Velcro picked up the unique serial number. A day later, the pallet arrived on a truck at the Sam's Club in Tulsa, Okla. A reader on the forklift immediately picked up the serial number. A beep on a laptop in the warehouse manager's office confirmed the arrival of the pallet. The normally understated Ashton calls it "the ping heard 'round the world."

It wasn't just that readers had successfully read the tag on the pallet. What was unique in this experiment was that there was an infrastructure that made it possible. The reader passed the tag's serial number to software that uses the Net to read electronic product codes through an object name service that works something like the Net's domain name service. The object name service points to a database with information written in physical markup language, similar to XML, that describes the productand, put simply, tells the computers at Sam's Club that a pallet of paper towels just arrived.